• In case of existence of any kind of relationship between IP and other professionals or between

the other professionals and corporate debtor, IP shall at the earliest report such relationship to
the Insolvency Professional Agency with whom he/she is enrolled, IBBI and the Committee of
Creditors of the corporate debtor.
• IP should be vigilant throughout the process to identify fraudulent, preferential, onerous and
extortionate credit transactions and reporting of the same to Adjudicating Authority.
• IP should record details of every meeting conducted with any stakeholder(s) of the Corporate
Debtor.
• IP should not take advantage of staff discounts or special payment terms, as doing so may
impair, or be perceived to impair, independence. Bribery or payment or receipt of secret
commissions in order to receive work or provide work to others should be unacceptable.

Thus, every professional must, to the best of his abilities, avoid any and all conflicts of interest. Even
the barest hint of conflict may taint his reputation as a professional and, by extension, that of his
profession. A professional must not only be independent, impartial and free of any conflict, he must
also demonstrably appear to be so.

Every professional must be held accountable to the highest standards of independence with respect
to the matter at hand. It is the professional's responsibility and duty to not only actively and
consciously meet such standards, but to also ensure that no aspersion can be cast on him or his
profession.

Independence & Impartiality

36
 REPRESENTATION OF CORRECT FACTS AND CORRECTING
MISAPPREHENSIONS
A Resolution Professional (RP) assumes the powers of the Board of Directors of the corporate
debtor and hence becomes akin to key information pertaining to the corporate debtor. The Code
mandates the RP to prepare an Information Memorandum which will help the prospective resolution
applicants to make an informed decision. Apart from this, the RP shall also act as the Chairperson
of the meeting of CoC where the RP brings to the table certain information to obtain various
approvals from CoC. In addition to this, the RP also files various forms with the IBBI to keep it
informed of the developments in the CIRP of the corporate debtor and to ensure transparency of the
process. From this, we can infer that various stakeholders rely on the information disseminated by
the RP.

However, during the CIRP either on the own

While there is no bright line rule
analysis of the RP or on the forensic audit report as to what information is
submitted by the forensic auditor, the RP may considered as “material
become aware of any misapprehension or information”, it can be explained
wrongful consideration of any fact. In that case, as such information which would
cause a substantial impact on the
as per the code of conduct, the RP is expected
decision making of the user of
to duly inform the same to the concerned such information
stakeholder. Also, while disseminating
information to stakeholders like CoC, RA, IBBI etc. the RP shall not conceal any material information
or make any misleading statements. As an Officer of the Court, the RP is expected to be unbiased
and diligent.

As per the First Schedule of the IP Regulations, an IP is required to:

 Inform of a misapprehension or wrongful consideration of a fact of which he becomes
aware to such persons under the Code as may be required, as soon as practicable.
 Must not conceal any material information or knowingly make a misleading statement to the
Board, the Adjudicating Authority or any stakeholder.

Representation of correct facts and

Correcting misapprehensions
37
THREAT FOR NON-COMPLIANCE
The following circumstances may create threat for non-compliance / breach of code of conduct
pertaining to representation of correct facts and correcting misapprehensions:
 RP along with the CoC hides material facts to get better offers from resolution applicants
 RP not initiating applications for avoidance transactions to gain personal favours from the
promoters or concerned stakeholders
 Not disclosing the red flags raised in the forensic audit report to the CoC

The RP should not become a scapegoat in such circumstances and rather show his integrity and
objectivity to disclose the material information to the concerned stakeholders and not hide / conceal
such information from their reach.

CASE ILLUSTRATIONS

Case Illustration I
Used the word “IBBI” as part of LLP name16

Contravention
 An IP incorporated an LLP with the name “IBBI Insolvency Practitioners LLP” and its website
“www.ibbi-ip.com” without any prior authorisation from the Board and gave a misleading
impression that LLP has been incorporated by IBBI or in some way related to IBBI.

Submission by IP
 The IP submitted that use of the words “IBBI” was without any intention or motive to gain material
benefits

Findings
 Such act was prima facie not acceptable from a qualified Chartered Accountant and a registered
IP as he is well aware of the implications of using the name IBBI which has been used to refer
to the Board, a statutory body, for any purpose under the code by custom and practice.

16
IBBI Disciplinary Committee Case No. IBBI/DC/09/2018; Order dt. September 6, 2018
Representation of correct facts and
Correcting misapprehensions
38
 Thus, the IP had violated provisions of section 208 of the Code read with regulations 7(2)(a) and
7(2)(b) of the IP Regulations and had attempted to misrepresent by failing to change the name
of the LLP even after repeated intimations by the Board. The IP was further ordered not to accept
any assignments without change in name of the LLP and his registration has been suspended
for three months.

Case Illustration II
Misrepresented facts on company website17

Contravention
 A director of a company had applied for IP registration with IBBI and during the scrutiny of
testimonials pertaining to his experience, it was found that the Company’s website stated, "We
are promoted by qualified Insolvency Professionals with accreditation from Insolvency and
Bankruptcy Board of India” and “Empanelled with top financial institutions of India for recovery
and insolvency related matters” which was misrepresentation of facts as none of the directors
had obtained for IP registration.

Submission
 The respective director submitted that the website was undergoing change and managed by a
new vendor who uploaded trial versions directly on the website during the development stage for
testing the user interface without any consent of directors.
 The website was to come live only after successful IBBI registration and declared that the
erroneous statement caused no commercial gains or losses to the company.

Findings
 In absence of registration of any of the directors of the said company as an insolvency
professional and the IBBI not being accrediting agency, the aforesaid statement on the website
is obviously misleading and prima facie misrepresentation.
 The profession of IP is of recent origin unlike other professions as medical, hence vendor
promoting website cannot make such a statement on his own unless specifically instructed.

17
Disciplinary Committee Order No. IBBI/ Disc. Com./2017/1 (F. No. IBBI/IP/DC/2017/29/1)
Representation of correct facts and
Correcting misapprehensions
39